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Notice of Federal Tax Lien · Letter 3172
A lien takes nothing. It claims everything.
The federal tax lien is the government's legal claim against all of your property. When the IRS records a public notice of it, lenders, buyers, and title companies see it, and ordinary transactions stop until it is addressed.
A federal tax lien arises by law when the IRS assesses a tax, sends a bill, and the bill is not paid. It attaches to all of your property, including property acquired later. The IRS may then file a public Notice of Federal Tax Lien, in Texas with the county clerk for real estate. After filing, Letter 3172 gives you 30 days to request a Collection Due Process hearing. A lien is released within 30 days after the debt is paid. Short of payment, the IRS can discharge specific property, subordinate its lien to another creditor, or withdraw the public notice.
Lien, notice of lien, and levy
These are three different things. The lien is the legal claim, and it exists whether or not anything is recorded. The Notice of Federal Tax Lien is the public filing that establishes the IRS's priority over other creditors. A levy is an actual taking of property. A lien secures the debt. A levy collects it.
The deadline
Within five business days after filing the first notice of lien for a tax period, the IRS must send Letter 3172. You then have 30 days, to the date printed in the letter, to request a Collection Due Process hearing on Form 12153. At the hearing you can argue that the filing was improper or premature, that it should be withdrawn, or that a collection alternative should replace it, and the result can be reviewed by the Tax Court.
Four ways to deal with a lien
- Release. The lien is extinguished. The IRS must release it within 30 days after the debt is paid in full, or becomes legally unenforceable, which includes expiration of the ten-year collection period.
- Discharge. The lien is removed from one specific property so it can be sold or refinanced, usually in exchange for the IRS receiving its share of the proceeds. Application is on Form 14135. Title companies will not close without it.
- Subordination. The lien stays, but the IRS lets another creditor move ahead of it, for example a lender refinancing a mortgage on terms that make the tax debt easier to pay. Application is on Form 14134.
- Withdrawal. The public notice is removed as if it had not been filed, though the debt remains. Requested on Form 12277. It is available after release for taxpayers who have been compliant for three years, and for taxpayers who owe $25,000 or less and have a direct debit installment agreement that will pay the balance within 60 months, after three consecutive payments.
Texas details
For real estate, the notice is recorded with the clerk of the county where the property sits, such as the Tarrant County Clerk or the Dallas County Clerk. Texas homestead law protects a home from most creditors. It does not protect it from a federal tax lien, which attaches to homestead property and, for a jointly owned home, to the taxpayer's interest in it.
What happens if you ignore it
The lien follows the property. A home cannot be sold with clear title, a refinance will be declined, and business receivables are encumbered, which can violate loan covenants. The lien also survives most bankruptcies as to property owned before filing. It lasts until the debt is paid or the collection period expires, and the IRS can refile to keep it alive in some circumstances.
When a lawyer matters
When a transaction depends on it, when the lien was filed while you were in an installment agreement or had an appeal pending, when the property is owned with a spouse or partner who does not owe the tax, and when the lien names the wrong person or entity. Lien priority is a legal question, and the answers decide who gets paid from a sale.
Official sources
The rules described on this page come from these primary sources. Check them, or the notice you received, for current figures and dates.
- IRS: Understanding a federal tax lien
- IRS Publication 783: certificate of discharge instructions (PDF)
- IRS Publication 784: certificate of subordination instructions (PDF)
- IRS Form 12277: Application for Withdrawal of Filed Notice of Federal Tax Lien (PDF)
- 26 U.S.C. 6321: lien for taxes
- 26 U.S.C. 6323: validity and priority against certain persons
When to call
Call now if:
- You received Letter 3172 or found a Notice of Federal Tax Lien in the county records.
- You have a contract to sell or a refinance in process on property with a lien.
- A lender or customer raised the lien as a problem.
- The lien was filed even though you are on a payment plan.
- You paid the tax and the lien was not released.
- The property is co-owned with someone who does not owe the tax.
Common questions
Direct answers.
What is the difference between a tax lien and a tax levy?
A lien is a legal claim that secures the government's interest in your property. A levy actually takes property, such as money in a bank account or wages, to pay the debt.
How do I get a federal tax lien removed?
Paying the debt in full results in release within 30 days. Without full payment, the IRS can discharge a specific property from the lien, subordinate the lien to another creditor, or withdraw the public notice when certain conditions are met.
Can I sell my house with an IRS lien on it?
Yes, with a certificate of discharge. You apply on Form 14135, and the IRS generally agrees when it will receive the value of its interest from the sale proceeds or when its interest has no value. Apply at least 45 days before closing.
What is a lien withdrawal?
Withdrawal removes the public Notice of Federal Tax Lien, which helps with credit and financing, while the underlying debt remains. It is requested on Form 12277 and is available, for example, to taxpayers owing $25,000 or less who are paying through a direct debit installment agreement.
Does a federal tax lien attach to my Texas homestead?
Yes. Texas homestead protections do not apply against the United States. A federal tax lien attaches to homestead property, although forced sale of a principal residence requires court approval and is uncommon.
How long does a federal tax lien last?
Until the tax is paid or the collection period expires, generally ten years from assessment, unless the IRS timely refiles the notice or the period has been extended by events such as an offer in compromise, bankruptcy, or a Collection Due Process hearing.
Related problems
IRS notices rarely arrive alone.
Payroll Tax & Trust Fund Penalty
Withheld payroll taxes belong to the government from the moment of the paycheck. If the company does not pay them, the IRS assesses the full amount against the people who could have.
Read more →Unfiled Tax Returns
The IRS will not approve a payment plan, an offer, or a hardship status until the missing returns are filed. It may also have filed versions of its own, with no deductions.
Read more →IRS Penalty Abatement
Penalties are often a quarter or more of an old IRS balance, and they are the most negotiable part. A clean three-year history can remove one year's penalties for the asking.
Read more →Innocent Spouse Relief
A joint return makes each spouse liable for all of the tax, and a divorce decree does not change that. Federal law provides three forms of relief, and Texas community property adds a fourth question.
Read more →IRS Installment Agreements
A payment plan is the most common way out of IRS collection. The size of the balance decides how much the IRS asks about your finances, and the terms decide whether you can keep it.
Read more →Currently Not Collectible
If paying the IRS would leave you unable to cover rent, food, and medicine, the IRS can stop collecting. The debt stays, and so does the clock that eventually ends it.
Read more →Next step
If a closing date exists, count back 45 days from it.
Send the lien notice and tell us what transaction is at stake.